Disney is facing tough times in the markets and in response, CEO Bob Chapek has announced that the multimedia conglomerate is about to begin a massive cost-cutting process that will halt hiring, limit travels, and unfortunately see significant staff layoffs. The announcement which came in form of an in-house memo distributed to executives and obtained by media outlets comes a few days after Disney's Q3 financial reports presented disappointing figures. Disney's stock price has been on a steady decline and is currently at its lowest mark in the past two years.
The new measures will set Disney on a long recovery road with profits set to pick up earliest by 2024, according to Wall Street financial projections. Disney is set to close out the year on more losses as forecasts for the fourth quarter are equally unsatisfactory. Despite an increase in subscriber numbers for the third quarter, the company's streaming arm still recorded a mammoth loss of $1.47 billion nearly double the figures recorded within the same time period in 2021. Linear TV numbers have also been lackluster with a 5% dip in pay-TV earnings within the said fiscal window.
In order to re-steer the company towards profit, Chapek wrote in his memo that these "tough and uncomfortable decisions" are "just what leadership requires." Addressing the potential layoff, Chapek wrote: “As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review.” The chief also expressed confidence in its restructuring plan stating; "Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.” To effectively enforce these measures, Disney is setting up “a cost structure taskforce” to be headed by the trio of Chapek, Chief Financial Officer Christine McCarthy, and General Counsel Horacio Gutierrez.
Hollywood was evidently one of the worst-hit industry sectors following the aftermath of the COVID pandemic which saw the worldwide closure of movie theaters. Big players in the industry are still reeling from its effects which have been further exacerbated by the vagaries of the economy. Disney joins a growing list of media giants looking to cut costs to boost profitability, including Netflix and NBCUniversal. Additionally, the high-profile WarnerMedia and Discovery merger has seen the cancelation of several hotly anticipated projects in cost-cutting measures, and Disney projects currently in the works could well be the next to be hit by this ravaging tsunami. Chapek did hint at the company “will not sacrifice quality or the strength of our unrivaled synergy machine" but noted that it needed to "ensure our investments are both efficient and come with tangible benefits to both audiences and the company.”
The coming months are set to reveal just how these decisions will alter the fate of our franchises, until then, we're keeping our fingers crossed and hoping for the best.